Wednesday, December 28, 2011

The startling gap in Michigan's salary stats

Like a bunch of other law schools, Michigan has recently put up much more detailed employment statistics in regard to its recent graduates. I don't want to understate the importance of this development: it appears that, at the rate things are going, schools that don't have at least moderately informative employment stats posted on their web sites will be at a significant competitive disadvantage with schools who do during this admissions cycle. This is especially the case given the evidence that prospective students are beginning to get much savvier about how inadequate the standard level of law school "disclosure" has been (see, for example, this surprisingly realistic thread at Top Law Schools).

Nevertheless, the new disclosure regime that's beginning to take shape is still far from optimal. For instance, Michigan's stats, characterized by the school's CSO as "comprehensive," don't disclose anything about permanent versus temporary positions, or full time versus part time work. Nor does the school report anything about school-funded jobs. This seems like a particularly glaring omission, given that its close peer competitor UVA just revealed that no less than forty members of the UVA class of 2010 were in law school-funded "jobs" nine months after graduation. (On the plus side Michigan lists the precise identity of every judicial clerkship its graduates took over the last three years).

The most startling gap in Michigan's data is a product of the school's failure to gather salary information regarding its graduates. For the class of 2010, the school reports nine-month salary data for just 56.4% of its graduates. This isn't significantly more than the comparable percentage at Ohio State (45%), and is embarrassingly low in comparison to the figures for Chicago (94%) and Virginia (about 85%).

What could account for these differences in reporting rates? Is Michigan simply not attempting to gather salary data beyond whatever its graduates report in response to the school's post-graduation NALP survey? (It's difficult to believe that anywhere close to 94% of Chicago's 2010 grads actually reported their salaries, and in any case the school's web site says the salary data "is taken from a variety of sources, including: student self-reporting, alumni surveys, employer information, published salary data, and electronic resources.").

If that's the case -- I'm contacting the school's placement director for more information on this point -- then consider what the reported salary numbers most likely encompass. 129 of the school's 374 2010 graduates were working for megafirms of 501+ attorneys, while another 31 were working for firms of between 251 and 500 lawyers. If we assume that 90% these people reported their starting salaries (a glance at the salary reporting rates for graduates with these sorts of jobs from schools that seem to rely exclusively on self-reporting suggests this is a realistic estimate), that would mean that the school has salary data for something on the order of 65 of the school's 214 graduates who did not take jobs with very large firms. This would mean a top ten law school has failed to gather salary information for fully 70% of the 57% of its graduating class that didn't end up in Big Law. That, I suggest, ought to be unacceptable to prospective law students considering going to Michigan, given that such people invariably have other at least superficially attractive options in regard to what law school to attend.

(A commenter points out that the reporting rate dropped from 79% in 2009. It was also 79% in 2008, and 77% in 2007, although only 68% in 2006. In this broader context, the drop to 56.4% in 2010 certainly seems significant).

All this raises the broader issue of just how law schools go about gathering employment and especially salary data. It would appear that the effort and resources otherwise comparable schools put into this crucial task vary widely. That is one of the many things about law schools which needs to change.

83 comments:

Those stats are outstanding and I first want to commend Michigan for joining University of Chicago's lead, but like you I am troubled by their meager 56.4% salary reporting (which is barely above Ohio State's 51%!)

The reason University of Chicago's stats were so laudable is that they had a 94% salary reporting rate. Putting your stats into their format, with a 56% salary reporting rate won't cut it.

I think a number of schools are cleaning up their acts when it comes to collecting and reporting salary data. Perhaps Michigan was filling in the blanks for non-responding students in prior years, but is now taking a more conservative approach. I agree that the widely varying practices among law schools are cause for concern. Hopefully the spotlight on this issue will force the schools to take the NALP survey guidelines more seriously.

It would be interesting to grill law school CSOs about their data collection practices over the past 5 years, not just what they're doing right now. I suspect that a lot of shady stuff is being hastily swept under the rug.

8:30: I doubt this is a product of any change in methodology. These stats were reported out ten months ago, which means the method used to gather them was in place more than a year ago, before the current pressure on schools had really begun to build.

The people we really need to get involved are the 0Ls. If admitted (but undecided) students start asking schools to fill in the gaps, they'll get the message.

You have something the school wants, either your GPA/LSAT, your diversity points, or your money, and you can use that as a bargaining chip. You will never again be in a position to ask something from your school.

So basically students who borrowed a ton of money to go to Michigan believing that they were guaranteed biglaw, wound up with no better job opportunities than what WUSTL/GW/Fordham students thought they were getting.

@8:21: 2 years in Big Law won't pay off your loans if you paid full fare.

With $160,000 income, you owe $38,400 in federal income tax. Another $6,600 in social security, and $2,300 in medicare.

Then, another $11,000 in New York State income taxes. And $5,600 in New York City income taxes.

Now you've got $96,100 after taxes.

Living in a moderately priced apartment in Manhattan will be about $2000 a month, including utilities.

Down to $72,100.

Odds are your firm has some sort of cadillac health insurance plan, which will cost you about $300 a month. So, we're down to $68,500. Another $100 a month for your subway card, and $100 for your cell phone, and you're down to $66,100.

If the rest of your living expenses, food, clothes, toilet paper, whiskey, and porn, amount to $1,500 a month, the amount you have leftover is $48,100. Let's assume you'll have a couple other expenses crop up, paying down credit card debt, flying home to visit the parents for Thanksgiving, and buying yourself a nice pair of cufflinks, and say you have $45,000 at the end of the year to pay down your loans.

If you paid full fare, you'll probably have graduated with about $185,000 in debt. Your $90,000 paid after 2 years isn't quite half that. Far from being paid in full.

And let's face it, you've just spent 3 years of your 20s in law school. You aren't going to want to spend the next 5 years living cheaply just to undo the damage law school did. You'd like to enjoy a little bit of your youth, take girls out for nice dinners, buy some really slick shoes, and go on a vacation. If you put in $25,000 a year on your loans, which is a whole lot of money, it's going to take you 10 years to pay them off. Most Big Law careers don't even make it to 5.

How about this for an interpretation of the salary reporting percentage: Could we say that this percentage represents the proportion of students happy with their job out of law school? That could be biglaw, government or whatever, but if they reported salary they are happy enough with where they wound up that they are willing to cooperate with the school.

That's not evidence. That's either pure speculation or a serious failure of logic. It's the equivalent of saying that the Moon landings were fake because you don't know anyone who went to the moon. Your brain is broken.

You're picking on the wrong with your "young people living in fancy apartments argument." BL1Y lived on 200th street in the Harlem/Bronx area, which is an area that I would very seriously not be caught walking through for fear of being attacked.

LawProf - in light of John 1986 yesterday and his seemingly blind ambition to go to law school despite everything discussed, what are your thoughts? No matter how bad the numbers are and no matter how transparent law schools become there will always be guys like this. How would address this within the framework of law school reform?

Numbers will always be fudged one way or another. The powerful will always influence what and how those numbers are reported. And in any case, there will always be students who ignore the numbers instead of concentrating on real reform (tuition, preparing students to be working attorneys, etc.) all the transparency movement will end up with is an endless argument about the "real" numbers and a place for mouth-breathers like transparency boy to lament their sorry lives on blogs like this one.

Transparency boy talking about elite circles while he sits online all day and comments within minutes of being referenced.

my lsat - 167, and what was yours boy genius?

So again, for the millionth time, why is student loan reform a bad thing? Since you know, you don't engage in endless arguments? Don't worry I'm not listening....its all the same shit from you and the same shit you'll be pulling your hair out about in 20 years. (lets see how quickly you respond my unemployed sad little psycho....)

@8:59: Living in the outer boroughs while working in Manhattan can add a lot of time to your commute.

I lived in Inwood my second year, working for a firm on Park Ave, and my commute was about an hour, one way. If I was going to leave the office late, it could easily have been a 90 minute commute back, if you get unlucky with the train schedule.

Extending your commute by half an hour each direction means your work year just grew by at least 240 hours. If your job was a regular 9-5, that wouldn't be too bad. When you're regularly working 9-9 though, that's really rough.

What these numbers suggest, and what Jim Chen's article points to, is that paying full fare under any circumstance, even at a top school with a guarantee of a Big Law job, is a bad idea.

$1,500 per month for living expenses (which excludes utilities and cell phone) is incredibly excessive. I might spend $500 per month on food, clothes, etc. Remember when you work in Biglaw you can usually bill dinner to the client when you work late.

Also, does your total debt figure include earnings as a summer that one should put towards 3L year?

12:01,When you work in Biglaw you really don't have a lot of time to go out much. My significant other and I don't spend a ton of money on alcohol when we go out but we both feel comfortable with where we are in life.

@BL1Y-- That is all true. But many people who work in firms live in the outer boroughs, Long Island, or NJ, and commute into Manhattan to work. It is not a crazy or far-fetched thing at all. People should do what they want. But if anyone is interested in saving money, Manhattan is not the best place to do that. That is all I was saying.

Your living expenses get racked up pretty quick when have to eat out a lot. Even when you work late, you don't always have a client to bill it to (for a number of reasons I won't go into here).

If you're in Midtown or FiDi, expect to spend at least $8 per lunch per workday, so that's $172 a month. If once a week you eat at a real restaurant rather than fast casual, your lunch bill will go up to about $200 a month. Breakfasts, coffees, mid-afternoon snacks and sodas can easily be another $100-200 a month. Toss in one night out a week at a bar near your office, and that's another $200 a month. We're up to $500-600, just and you haven't even had dinner, eaten on a weekend, or wiped your butt yet.

BL1Y,I pack my lunch, sandwich and an apple every day and I don't eat snacks from the vending machines in part because it's cheaper and in part because it's healthier. I drink water, not soda and the office has a coffee / tea machine that's free. I also don't have the time to eat lunch at a sit down restaurant all the time.You're correct regarding working late and no CM to bill food to at times. Happens to me often as well although it's not very often that I'm working past 9 on non-billable projects so I usually wait until I get home to eat and on occasion get Subway. I don't go out to a bars during the week as I'm usually mentally exhausted when I'm done with work. I agree my $500 is probably on the low end for monthly expenses, but I think your $1500 is way too high. What I described above are very simple ways to lower expenses and you really won't miss them that much.

This is what people who advocate cutting spending (whether personal or government) don't understand: I think Bl1Y's $1500 monthly budget is on the low end for law firm associates, but let's call it excessive and say he can bring it down to $1000 through the things you mention. All that gives him is an extra $6000 a year -- nothing to shake a stick at, but also not going to make much of a difference in his debt or savings when the typical career at a big firm is prob 2-3 yrs. say this as someone who is very careful with money.

To make it in NY (in law or otherwise), you really need to get serious about personal finance. Among other things this means living with roommates in Manhattan or living outside Manhattan and automating your savings plan so you're not just wondering where all the money goes. The friends I have that are unhappy and trapped at firms are those who never had a career or financial exit strategy; those who had one or the other are leaving or will soon.

At the risk of stating the obvious, I see no reason why we shouldn't strive for both transparency and student-loan reform/tuition reform. Transparency seems like just a basic ethical requirement. It won't help every prospective law student, but there's that parable with the guy on the beach and the starfish...

Student loan reform is going to be a necessity for the fiscal health of the country. It's a stickier issue than transparency, however. While it's tempting to take the Ron Paul approach and say just get rid of federal student loans all together, I'm not sure that's the answer. If it were up to me, I might say something like - if, one year after graduation, more than X percent (20? 30?) of a given institution's graduates were using IBR, that institution would no longer be eligible for grad plus loans. The school would have to either lower tuition to less than 20K/year, or lose those students who couldn't make up the difference out of pocket. If after a few years, students graduating with no more than 60K in debt were still needing IBR* in large numbers, the school would have to either: lower tuition to what its students could afford, or lose eligibility for federal loans altogether. (I would also make private student loans dischargeable like any other debt, to prevent predatory lenders from 'generously' stepping in to fill the void.)

*I would probably make an exception for those whose employment qualified them for PSLF. Though, in my fantasy world, law school tuition would be low enough that you could work for legal aid and still pay your loans off in 10 years. LOL.

A high school then college friend of mine gave me a ring about 5 minutes ago. She works for some city agency as a social worker that assists those of us who aren't as fortunate to obtaining various social support programs. I've known her for years and she knows I've become a lawyer. Today in her office she was assisting a man in his mid 30's who is being faced with an eviction from his parents house. He's an unemployed lawyer who was living with his eldery mother and stepfather. The mother and stepfather have moved to a retirement and the lawyer was left with nowhere to live. Mom tried helping him but she can't really afford to pay rent....so he hit the streets and attempted suicide. He was hospitalized treated and is now pending "release" and since she's the social worker assigned to the case she called to see "if I know anybody hiring."

The guy worked at some small firm (sounds like me lol) but was laid off and has been unemployed over 2 years now. He can't find legal employment and he can't find non-legal employment.

I told her my firm isin't hiring and that I don't know anybody hiring but that I'll keep my ears open.

She said he is a nice guy and that she is "SHOCKED" that a lawyer with a few years experience can't earn a living. He also has credit card debt (which he used to live off after savings dissipated and "lots" of student loans)

To the person who works late to get the free meals at work - YOU'RE NOT SUPPOSED TO RUNNING UP CLIENT TIME TO STEAL FOOD. Odds are that if you spent less time commenting here and more time actually working, you could get your work done in time and go home. But instead you drag it out so the firm will buy you dinner. That's unethical on so many levels that you should be reported for this strategy. I sure as hell hope no one ever entrusts you with money.

Clients will get really worked up over paying $20 for a meal, but never notice when you just round up reading an e-mail to 0.1 hours and charge them $30 for it.

If lawyers had any business sense, they'd have a generous meal plan, not pass the cost on to the client, but use it as an incentive for associates to inflate their bills. Ordering in for the entire office would be cheaper than each associate placing an order on their own.

If you're planning on staying late, then at 6:00pm you e-mail whoever, so they have a headcount, and dinner is in the conference room at 7:00, and there's an understanding that you're expected to bill at least another two hours after. Associates will fill up on food, do another 45 minutes of work, play Angry Birds, until 9:30, write up a bill for 2 hours, and head home.

BL1Y,I guess I don't feel miserable living the way I do and I'm far healthier than most of the people I work with. The things that challenge me in life are the same as for other biglaw people (not enough billable work, etc.) regardless of spending habits. 4:13,I didn't mean to suggest those cost cutting methods would work miracles, but every thousand dollars helps. I completely agree about roommates in Manhattan (I have them too). It cuts about $1K per month in rent / utility expenses and you're working all the time so you don't spend much time at home anyways.

@5:46: Not necessarily non-billable. But, let's say a partner asks you to stay late because they might need you to work on a project after their West Coast counterpart e-mails something back.

You wait 8pm rolls around, you haven't been assigned anything yet, you can't stick the client with a meal. Just imagine if you ordered food and after it arrives the boss says not to worry about it, go home, you can do it in the morning. Shite! Might as well pack your bags now and just pray there isn't a complaint to the ethics committee.

Or, you get a new project to work on at 6pm and decide to put in a couple hours. Most clients will be pissed if they paid for a meal even though you only billed 2.5 hours to them that day.

The latter scenario happens a lot, you have 3 different projects you worked on, billing 3.5 hours to each client. You could try sticking one with a meal, and you'll probably not get chewed out too badly by the boss since you can show that you billed 10.5 hours for the day, but still, it's not worth the hassle of getting yelled at.

And yes, I don't think anyone mentioned working late just to get the free meal, well, until I proposed my idea above. But, plenty of people do it. Roll into the office at 10:30, check e-mail, work for 15 minutes, go to lunch, get back at 1:00pm, take a 45 minute break at Starbuck's later on... oh no! Now I need to stay late just to bill 7 hours today! Meal time!

Fair enough. That usually only happens to me when I work with other associates and they dump the shit they don't want to do on me before they leave. Sounds like your firm is pickier about the meals than mine is, although my firm just writes off the cost of meals so they're not answering to the client about it.

I guess some people might do that for the free meal, I think my personal time is more valuable the few evenings I can get it.

I took lunch with me to work plenty of times. Not really to save money, but because other than Sinigual, the food in the area was crap.

Being stuck at your desk all day sucks though, and eating lunch at your desk just makes it that much more miserable.

You definitely can make the money work, but I guess my bigger point is that people need to really be aware that winning the golden ticket - landing a Big Law job - can still be totally miserable. Long hours, stressful work, terrible coworkers, shit you don't really care about doing, and on top of it, you still have to tighten your belt and pinch pennies to pay off your loans.

That's why I study so hard. One day I'll have a nice office at a Wall Street firm where after working past 11PM one night I can order a beautiful Ukranian woman from my firm's preferred services. Looking out on the Manhattan skyline, merger documents on my desk as she walks in. What a life. What a life that will be.

I have defaulted on $90,000 in student loans. The remainder of my loans (I believe they are now somewhere around $100,000) are in forbearance. Last year I made a total of about $40,000, first as a temporary administrative assistant and then as a full-time employee of a corporation. Unable to find a job, I attempted to start my own law practice, which was almost as much of a waste of time and money as getting a law degree. I foresaw disaster in 2008 when some of my loans went into repayment. I called my lender, Citibank, several times to see if we could work out a payment plan that I could stick to but was told multiple times that my only option was default. By 2009 I had used all the deferment and forbearance time for certain loans.

I now take home $3600 a month as a legislative analyst. I live in a hovel in New York, paying $1,200 a month for rent and, in the winter, more than $200 a month for gas and electricity. I cannot find a landlord who will rent to me given my credit score (which says nothing about my history of paying rent on time–fortunately, I have had no problems paying rent yet). I would like to move to a cheaper apartment, but I’m afraid that won’t be possible with my credit score. If I move back in with my parents, I will have to quit my job. My parents live in a small town in Texas. I’m not sure what my job prospects would be there.

According to Citibank, my defaulted loans have been sold, but according to the collections agency, DCS, they have not. I really don’t know their status, other than that they are in default. I know that I cannot get a pay raise at my job because salaries have been frozen for three years, so I am currently applying for higher paying jobs and hoping that the hiring companies don’t require a credit check. I have looked into escort services as a way to make money on the side but am terrified of being raped or getting an STD and frankly don’t think there is much of a market for someone who looks like me.

I guess my question is whether I should try anything else before committing suicide. I understand that nothing is free, including “education,” but I feel that now I am being disproportionately punished for my crime of stupidity (the crime of thinking that I could go to law school, become a lawyer, and make enough money to pay for law school and lead a better life than my parents have led). I am completely miserable and see no hope whatsoever, especially in light of the fact that people who owe less than a quarter of what I owe are contemplating suicide.

I would greatly appreciate a response, even if it is just to confirm that there is no hope.

Susan,I just read your post and it's a complete load of shit. Exactly what school do you think does all the things you listed in your article, because we can speak with their alumni to confirm that you're wrong.

I just want to comment briefly on the get roommates, bring your lunch, live outside manhattan advice/debate. While that might all be good advice, and help you pay off your loans more quickly, you're misunderstanding the biglaw bargain- they ask you to work lots of hours and even more than just work the hours, be available, i.e., responsive to e-mails on your blackberry at any time. In exchange, when you do get out of work, you get to take a quick ride home, to somewhere decent, with enough money in your pocket to pick up some grub, and if you ever get to take a vacation, you have enough money to be able to afford to go somewhere. That's the deal.

Second, vis a vis client development, that you might become important later in your career, when your firm is telling you that your work is good, but you don't have a future at the firm, its important to be a social person. Social people, people who are well liked, and who know lots of other people- those are rainmakers. The people eating tuna sandwiches at their desk, taking the train out to Queens, those are not social people. There are exceptions of course, but the whole scrimp and save to make it work deal- that's what you do if you take a pleasant job that allows you to have a life.

When I briefly worked in biglaw the firm had a little address book directory type of thing for the entire firm. I kept because it was interesting from a cultural/socio-economic point of view. The partners lived either in nice suburbs or what I'll call grown up parts of manhattan, e.g. park avenue. The associates by and large lived in other areas of manhattan, e.g. yorkville and chelsea. Of the non-lawyer staff, those on the younger and maybe more highly compensated side lived in mildly fashionable areas of the outer boroughs- certain brooklyn neighborhoods, maybe astoria. The older staff primarily lived in unhip, unglamorous parts of the Bronx, Brooklyn and Queens. The atmosphere at the firm was nice though, face to face, we all pretended like we had similar lives.

That was not the way it was at my firm. Many younger associates lived in Brooklyn. Some lived in Jersey City and Hoboken and used the PATH to get into the City. A number started in Manhattan, but migrated out after a couple of years.

Your options are obviously very different if your firm is located in the WTC/FiDi area.

@9:22 is exactly right about the bargain. If you go the Big Law route from a top school, the expectation is that you'll spend three years of your life in an overcharged, stressful, competitive environment, fork over $120,000 in tuition, and when you graduate you'll work 10-12 hour days, be available 18 hours a day, and work your ass off; but, in return you'll have interesting work, a bit of social prestige, and enough money to enjoy an upper-middle class life.

Nowadays, the work is dull and meaningless, there's no prestige in it, and with a massive debt load, the money isn't even that great. It's good money, no doubt, but not enough to make the bargain worthwhile.

Hi. 9:22 and 9:53 here. The availability of transportation is not really the issue.

If an associate lives somewhere where the path would be required to go, when that associate goes home in a car after 8, 9 or whatever the rule is at that particular firm, the client ends up picking up the tab for a radically more expensive ride, complete with tolls and a different zone designation. But that's not really the point.

But that's not really the point.

The point is that if you are in a position where you have to work in biglaw and scrimp and save, you are doubling down on your misery. I scrimped and saved when I was an assistant DA. It was the down side of having a fun job that I loved. My friend that left finance to become a high school math teacher scrimps and saves.

Yes, scrimping and saving will help you pay down your loans if you work in biglaw, but what's the point of getting aboard that train in the first place?

"but what's the point of getting aboard that train in the first place?"

So that you get to be an indentured slave and enable your law school professors and administrators to earn obscene salary and pensions for doing little to no work. Someone has to pay the loans to keep the scam going.